Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *  The GSTN has issued an Advisory dated 21.04.2026 about the introduction of an Offline Tool for the Invoice Management System (IMS)  *  CBIC extends due dates for filing of FORM GSTR 3B  for the month of April 2026 *  Interest cannot be imposed in adjudication order, if not demanded/quantified in show cause notice : Allahabad HC *  Wheelchairs with toileting facility eligible for exemption: CESTAT affirms customs duty exemption to importer *  Industries urge GST council to allow inverted duty refunds on input services *  Tamil Nadu GST dept introduced virtual hearing facility for GST appeals under under section 107 of the TNGST act: detailed guidelines  *  CIC urges authorities to implement GST evasion complaint tracking system *  Even if the assessee opts "NO" for personal hearing in form DRC-06 ,The mandatory requirement under section 75(4) to grant opportunity of hearing cannot be waived:Gujarat High Court  *  Glufosinate imports curbs imposed by govt *  Government extends Re-import period for exported cut & polished diamonds *  CIC flags lack of tracking system for tax evasion complaints,urges GST authorities to improve transparency *  No Custodial Interrogation needed in GST fraud case based on documentary evidence already in Department's Possession : Chattisgarh HC *  Orders under section cannot be sustained if passed without considering the taxpayer's objections and without granting a personal hearing:Gujarat High Court *  Mere cancellation of supplier's registration cannot,by itself,justify denial of ITC or cancellation of the recipient's registration:Bombay High Court *  High Court sets aside GST notice citing factual errors and natural justice violations *  Provisional Bank Attachment under Section. 110 of Customs Act Unsustainable Beyond Statutory period without Extension order: Bombay HC orders to defreeze accounts *  Post Clearance MRP Alteration by Distributor Does not attract Differential Customs Duty: CESTAT *  DGFT Expands scope of 'Screws' classification under RoDTEP Scheme  *  E-way bills surze to all time high of 140.6 million in March *  GST Exemption Allowed on Pure Labour Services for Standalone Houses: AAR  *  GST Payable Only on Margin in Second-Hand Car Sales, Subject to Strict Conditions and No ITC Claim: AAR *  DGFT rolls out procedure for allocation of calcined coke *  GST portal update : Pre-deposit amount now editable in Appeals *  J&K HC declared TMT scrap a 'Specified Good' eligibile for GST refunds under Support Scheme  *  Pigmy agents are employees of banks; no GST can be levied on commission  paid to them : Karnataka HC *  DGFT Revises HS Code Description for Screws Under RoDTEP *  GST Registration Cancellation Invalid Without Proper Service of Notice: Allahabad High Court. *  Bengaluru CGST | GST Backlog Appeals Deadline Fixed at June 30, 2026 *  No Time Bar on Refund of Service Tax for Services Not Rendered: CESTAT  Remands Indiabulls Case for Unjust Enrichment Check. *  Supreme Court Holds Renewable Energy Incentive Must Benefit Generators, Not Be Adjusted in Tariff
Subject News *   Delhi HC Quashes Order, Says Reminder Cannot Validate Improperly Served GST SCN *  KARNATAKA HIGH COURT REMANDS GST SHORTFALL MATTER DUE TO ABSENCE OF PERSONAL HEARING   *  CESTAT cancels confiscation and penalties on imported computer cabinet cases: Custom duty restricted to 111 surplus units *  Deposit of tax during search or investigation cannot be treated as 'Voluntary Payment' : Bombay High Court *  Section 76 of the CGST cannot be invoked where the tax has already been duly deposited, even if through another registration of the same entity: Madras High Court *  Sec 74 allows use of material regardless of source; illegality or flaws in section 67 search do not vitiate valid adjudication: HC *  Inter-State transfer of ITC on Amalgamation permissible as given under section 18(3) read with rule 41 of the CGST rules, 2017: Gujarat High Court *  HC: No GST on commisson paid to Pigmy Agents *  IGST refund denial on illegible bill of lading invalid absent chance to furnish docs; merit reconsideration in appeals directed: HC *  ITC is not admissible on GST paid on leasehold rights of land used fpr setting up an air seperation plant: AAAR,Tamil Nadu *  GST: No penalty under Section 74 after voluntary ITC reversal due to non-existent supplier : High Court *  TN AAAR denies GST ITC on Land Lease under Sec. 17(5)(d) for setting up plant and machinery *  GST proceedings quashed as notices sent to old address, despite updated address in registration *  Importer Can’t Be Penalised for Alleged IGCR Procedural Lapses Without Evidence of Departmental Error: CESTAT *  Structured Healthcare Training Not ‘Charitable Activity’, 18% GST Payable: AAR  *  CESTAT As The Appellate Authority For Central Sales Tax Disputes: A Paradigm Shift Under Finance Act, 2023 *   Rs. 25K Cost Imposed On SGST Joint Commissioner for Attaching Bank  Accounts Without Forming Mandatory “Opinion”: Bombay HC *   Ex-Parte GST Order Without Hearing Violates Natural Justice: Karnataka  High Court Quashes Adjudication and Bank Attachment.  *   Retrospective GST Cancellation Can’t Invalidate Genuine Transactions:  Jaipur Commissioner (Appeals) Quashes Rs. 95,670 ITC Demand. *   GST Pre-Deposit Non-Compliance: Allahabad High Court Allows Appeal  Subject to Rs. 30 Lakh Balance Deposit, Recognises Offline Filing. *  Documentary Nature of Evidence: Allahabad High Court Grants Bail in Rs. 32.66 Crore Fake ITC Fraud Case *  Supreme Court Flags Systemic Bias in Army’s Permanent Commission Process for Women Officers *  Re-Determination of Land Compensation Can Be Based on Appellate Court Awards, Clarifies Scope of S. 28-A: Supreme Court. *  Supreme Court Imposes Rs. 5 Lakh Costs On Rent Authority Officer For Acting Beyond Jurisdiction. *  DGGI Meerut | Court Denies Bail to Accused in Claiming Fake ITC And Export Refunds *  Denial of GST Rate Revision Benefit to Contractor Violates Article 14: Rajasthan HC *  GST Registration Cancellation for Non-Filing of Returns: Gauhati High Court Directs Restoration on Compliance. *   Supreme Court Quashes FEMA Adjudication Orders, Revives Proceedings at  Show Cause Stage. *   Higher Rank, Harsher Punishment Justified: Supreme Court Restores Dismissal  of Bank Manager in Misappropriation Case. *   Limitation for Export Refund to Be Counted from Foreign Exchange Realisation,  Not From Export Invoices Issuance: CESTAT  

Comments

Print   |    |  Comment

PJ/CASE LAW/2014-15/2308

Whether proprietor’s accident is reasonable cause for waiving penalties?

Case:-M/s TARACHANDRA ENGINEERING PVT LTD Vs COMMISSIONER OF CENTRAL EXCISE, VADODARA-I
 
Citation:-2014-TIOL-1646-CESTAT-AHM

Brief facts:-The appellant is engaged in providing taxable service falling under the category of Erection, Commissioning or Installation services. In addition, the appellant is also engaged in rendering taxable services under the category of Management, Maintenance & Repair services as defined under Section 65 (108)(zzg) of Finance Act, 1994. The appellant failed to get the later category of service registered with the Department and also belatedly filed ST-3 returns for the period October 2007 to March 2008 on 17.07,2008. Appellant on their own paid the Service Tax of Rs. 2,75,365/- along with interest of Rs. 60,477/-. On receipt of ST-3 returns, Revenue issued a show cause notice for penal action and penalties under Section 77 & 78 of Finance Act, 1994 were imposed upon the appellant. In the appeal filed before the first appellate authority, penalties imposed under Section 77 & 78 of Finance Act, 1994 were upheld. Aggrieved by the Order-in-Appeal dt.19.12.2011/20.02.2011, passed by first appellate authority, appellant has filed this appeal.
 
Appellant’s contentions:-Shri Dhaval K. Shah (Adv.) appearing on behalf of the appellant argued that there was a delay in filing ST-3 returns and payment of Service Tax due to accident of proprietor and also due to financial difficulties faced by the appellant. It was his case that entire penal proceedings of issue of show cause notice started only after the appellant filed the required ST-3 returns with the Department and also paid the entire Service Tax along with interest before the issue of show cause notice. It was his case that as there was a reasonable cause for delay in filing the returns and payment of Service Tax, therefore, their case is covered by the provisions to Section 80 of Finance Act, 1994. He relied upon the judgment of CESTAT Delhi in the case of CST New Delhi Vs Competent Automobiles Co. Ltd [2011 (29) STR 561 (Tri-Del)]. It was emphasized that in the case of CST New Delhi Vs Competent Automobiles Co. Ltd. even the detection was done by the Revenue and only after detection, appellant in that case paid the Service Tax immediately. That inspite of this fact, it was held by Delhi CESTAT that penalty under Section 78 is not imposable as per Section 80 of Finance Act, 1994.
 
Respondent’s contentions:-Shri J. Nair (A.R.) appearing on behalf of the Revenue argued that penalty has been correctly imposed upon the appellant by the lower authorities in view of CESTAT Chennai Bench judgment in the case of Jupiter Sea & Air Services Vs CCE Chennai-I [2006 (3) STR 704 (Tri-Che.)] = 2005-TIOL-806-CESTAT-MAD.
 
Reasoning of judgment:-In the present appeal, the appellant paid the entire Service Tax along with interest and intimated the same in the ST-3 returns belatedly filed with the Revenue. The reason given for late payment of Service Tax was accident of their proprietor and also the financial difficulties faced by the appellant. Ld.A.R. relied upon the judgment in the case of Jupiter Sea & Air Services Vs CCE Chennai-I(supra) to support his case that penalties are imposable upon the appellant. However, it is observed that the judgment passed by CESTAT Chennai was a single member judgment whereas the judgment passed by CESTAT Delhi in the case of CST New Delhi Vs Competent Automobiles. Co. Ltd (supra) is a two member judgment delivered in 2011. In the present appeal, the appellant himself paid the entire Service Tax and interest before issue of show cause notice and also intimated the Department by way of filing the required ST-3 returns, though belatedly. The short payment of Service Tax was not detected by the Revenue, therefore, the reasonable cause explained by the advocate, on account of an accident of the proprietor of the appellant and their financial difficulties are justifiable reasons for the purpose of Section 80 of Finance Act, 1994. Accordingly, it is held that no penalty under Section 78 of the Finance Act, 1994 is imposable upon the appellant by virtue of proviso of Section 80 of Finance Act, 1994. In view of the above observations, the appeal filed by the appellant is allowed by extending the benefit of Section 80 of the Finance Act, 1994.
 
Decision:- Appeal allowed.

Comment:-The analogy drawn from the case is that if the appellant pays the service tax along with interest suo motto and also files ST-3 returns belatedly, and the reason for delayed payment of service tax and delay in filing of returns is reasonable, penalties imposed may be waived by invoking the provisions of section 80 of the Finance Act, 1994.

Prepared by:- Monika Tak
 

Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
1008, 10th FLOOR, SUKH SAGAR COMPLEX,
NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
ASHRAM ROAD, AHMEDABAD-380013

Phone No. :
079-32999496, 27560043

Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com